Adelaide Brighton Ltd Morgan Stanley Emerging Companies Conference 14 June 1012 Presented by: Mark Chellew Managing Director & CEO Disclaimer The following presentation has been prepared by Adelaide Brighton Limited ACN 007 596 018 for information purposes only. The presentation may contain forward looking statements or statements of opinion. No representation or warranty is made regarding the accuracy, completeness or reliability of the forward looking statements or opinion, or the assumptions on which either is based. All such information is, by its nature, subject to significant uncertainties outside of the control of the Company. To the maximum extent permitted by law, the Company and its officers do not accept any liability for any loss arising from the use of the information contained in this presentation. The information included in this presentation is not investment or financial product advice. Before making any investment decision, you should seek appropriate financial advice, which may take into account your particular investment needs, objectives and financial circumstances. Past performance is no guarantee of future performance. 2
Agenda Adelaide Brighton s competitive position Delivering strong shareholder returns Consistent long term growth strategy Key profit and operational challenges Carbon tax Outlook 3 Competitive position A leading Australian integrated construction materials and lime producing company with high exposure to the engineering, infrastructure and resource sectors An S&P/ASX200 company with operations in all states and territories; 1,600 employees; AUD1.8 billion market capitalisation Well positioned to supply cement to all mainland states from its domestic manufacturing base, coastal supply and import facilities Market leader in lime in Australia, and 9th largest producer on world scale The second largest supplier of cement and clinker in Australia Market leader in concrete masonry products and an emerging position in aggregates and ready mixed concrete Adelaide Brighton is highly cash generative with low gearing and balance sheet capacity for organic and acquisitive growth 4
Construction materials industry structure 5 ABL snapshot 6
Competitive position A leading construction materials and lime producer for the construction and minerals processing industries Number 1 lime manufacturer positioned in key resources markets A leading cement supplier with access to major construction markets; healthy regional presence Number 1 cement importer with unmatched supply network Number 1 national market share in concrete products Strategic aggregates and premix business #1 #2 #1 #1 #4 No. 1 lime producer leveraged to theminerals processing industry No. 2 cement and clinker supplier to the Australian construction industry No. 1 cement and clinker importer with unmatched route to market No. 1 market share in concrete products No. 4 market share in concrete and aggregates 7 Total shareholder return A decade long transformation into national construction materials supplier and the leading supplier of lime to the resources sector Returns underpinned by the rationalisation of production capacity, reinvestment in cement and lime manufacturing and measured downstream growth Improved cost structure and competitive position have supported consistent growth in shareholder value Ranking 1 2 3 4 5 Industry peers 27 47 53 TSR ranking Adelaide Brighton vs companies in the S&P/ASX200 1 January 2001 to 31 December 2011 Adelaide Brighton Newcrest Mining Origin Energy Orica Caltex Boral James Hardie CSR 250 500 750 1000 % TSR Source: miraqle metrics 8
Shareholder returns 25 20 15 10 5 0 EPS (cents) 2006 2007 2008 2009 2010 2011 2011 EPS 23.3 cps, down 2.2%, tax driven Total 2011 ordinary dividend of 16.5 cps, fully franked 25 Dividend (cents) Interim Final Special 100 Payout ratio (% incl special dividends) 20 90 15 80 10 70 5 60 0 2006 2007 2008 2009 2010 2011 50 2006 2007 2008 2009 2010 2011 9 Performance highlights $m 31 Dec 2011 31 Dec 2010 % change Revenue 1,100.4 1,072.9 2.6 EBIT 223.4 216.2 3.3 PBT 206.4 202.2 2.1 NPAT attributable to members 148.4 151.5 (2.0) Cents EPS 23.3 23.9 (2.2) Final dividend 9.0 9.0 Full year ordinary dividend 16.5 16.5 Full year special dividends - 5.0 Gearing Net debt $m 248.4 148.4 Gearing % 26.0 15.9 Current debt facilities total $500 million. Balance sheet strength and flexibility for further value enhancing organic and acquisitive growth 10
Adelaide Brighton revenue analysis 70% of revenue from Cement and Lime operations Exposure to engineering and mining sectors supporting demand WA and SA are key geographic markets Revenue - product group Concrete Products Revenue- by segment Mining Revenue by state NT Tas Qld Concrete & Aggregates Cement Engineering Residential NSW WA Lime Nonresidential Vic SA Source: ABL estimates 11 Consistent long term strategy Consistent strategy over the last decade has supported long term shareholder returns:» Cost reduction and operational improvement» Lime development» Focused and relevant vertical integration Cost Management Programs delivered $23 million of benefits in 2011 Cement -$60 million investment to expand milling capacity by 750kt pa at Birkenhead, SA. Annualised benefits of $10-$12 million from mid 2013 Lime investment of $34 million for two projects bringing environmental improvements and additional 100kt pa capacity at Munster, WA Downstream acquisitions four acquisitions in 2011 totaling $48 million at 7.3 times 2011 EBITDA Adelaide Brighton continues to evaluate potential acquisitions aggregates expansion is a key factor in future strategic growth 12
Contract renewal Cement supply agreement formalised with major cement customer:» Covers SA and WA cement supply until 31 Dec 2012» Cautiously confident of securing supply for SA and WA for 2013 and 2014, on not materially different terms Lime supply contract with major WA alumina producer formally executed» Effective from 1 July 2011 and covers supply for periods ranging between five and ten years» Some of the contracted volume is not committed, which opens the possibility of imports from other suppliers» We expect to supply circa 100% of the customer s requirements in 2012 Supply to ICL agreed in principle subject to ICL unit-holder approval» Cautiously confident that supply arrangements which expire mid 2013 will be renewed on not materially different terms 13 Market demand M sm3 27.0 26.5 26.0 25.5 25.0 24.5 24.0 23.5 23.0 22.5 Australian concrete demand (12 month moving total) Concrete market peaked in mid 2008 after seven years of growth Downturn of approximately 10% since peak in 2008 Recovery plateaued in 2011 Projects offsetting weakness in commercial and residential National concrete market expected to remain flat in 2012 22.0 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Apr 12 14
Key profit and operational challenges Industry remains highly competitive ICL contract renewal nearing completion Threat of small scale opportunistic lime imports in WA and strong AUD impacting pricing and potentially volume. Dumping case against WA lime importer initiated Cement import risk in NT and north west WA High AUD limits the scope for cost recovery for any domestic manufacturer Munster licencechanges -kiln 5 bag house filter by mid 2013 estimated spend of up to $17 million Carbon tax impact on NPAT in 2012, circa $2.7 million before mitigation Carbon tax Environmental performance High AUD Competitive landscape ICL contract renewal Cement import competition Lime imports 15 Carbon tax implications Adelaide Brighton is committed to lowering its carbon emissions and has significantly reduced its carbon footprint in Australia by:» Using supplementary cementitious materials such as fly ash and slag» Using alternative fuels and raw materials» Implementing changes to cement standards» Closing less efficient clinker facilities» Developing its capability to import cementitious materials As a result of investment in import supply chain over the last 20 years, Adelaide Brighton is now the largest importer of cement and clinker into Australia This places the Company in a strong position relative to our domestic cement and clinker competitors to deal with the potentially rising cost of local production given the proposed introduction of a carbon tax 16
Carbon tax implications The carbon tax is unlikely to have any material impact on the long term growth strategy:» Operational improvement and asset utilisation» Meeting the significant growth in lime demand from the resources sector» Vertical integration into downstream concrete, aggregates and concrete products markets Considering proposed carbon tax and high AUD, Adelaide Brighton expects it will significantly mitigate the impact of the carbon tax over the next five years by:» Enhancing its import flexibility» Reducing reliance on domestic manufacture» Increasing the use of alternative fuels and cementitious substitutes Due to timing of contractual pricing clauses and planning for changes to import facilities, significant mitigation expected in 2013/2014 Estimated impact of carbon tax in 2012 of circa $2.7 million profit after tax, before mitigation (circa $5 million, before mitigation in the first 12 months of the scheme) 17 Outlook 2012 cementitiousvolumes expected to be marginally higher than 2011 Demand remains robust in South Australia due to infrastructure and non residential projects, and in Western Australia as a result of mining and resource projects Further weakening in residential and non-residential sectors Strong Australian dollar, competitive pressures and risk of imports in some markets may limit scope for price increases In 2012, lime sales volumes are expected to be marginally higher than 2011 Benefit of improved lime pricing to major aluminacustomer in Western Australia, effective from 1 July 2011 The threat of small scale cement and lime imports in Western Australia and the Northern Territory remains 18
Outlook Australian concrete market plateaued in 2011 Concrete and aggregates pricing expected to improve increases notified effective 1 April 2012 Weakness in the concrete masonry market is expected to continue in 2012 due to difficult conditions in the commercial and multi-residential sectors Significant land bank in WA, SA and Vic over 2-10 years it is possible to realise circa $100 million Continuation of successful long term growth strategy with investment in cement, lime and downstream operations Carbon tax impact on 2012 NPAT expected to be circa $2.7 million, before mitigation Ongoing focus on cost management across the Group 19